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If you want to be a pro trader!
If you want to be a pro trader then you must know price action and demand supply.
#traders #priceaction #dyor #crypto2023 #Binance
#traders #priceaction #dyor #crypto2023 #Binance
Most Practical Guide on Bearish market structure with Examples
It’s crucial for every trader, regardless of whether they use price action or indicators, to have a solid understanding of market structure. Understanding market structure enables traders to stay in sync with the market and avoid counter-trend trading, which, in turn, increases the probability of successful trading setups.
In this post, I will delve into bearish market structure, providing clear illustrations and examples to help you grasp this important concept. If you aren’t familiar with market structure, you can go through this guide to brush up on your basics.
To understand a bearish market structure, it’s essential to familiarize ourselves with a bearish trend or downtrend. This will provide us with the necessary context to recognize the characteristics of a bearish market structure.
Table of Contents
What is a downtrend?
What is a Bearish market structure?
What is the use of identifying a bearish market structure?
Exhibit: Pullback in a Bearish market structure
What happens when there is a “Possible” change in Bearish structure?
Possible scenarios after the formation of a “New High”:
Trend Reversal
Consolidation and Continuation
Bull Trap
What is a downtrend?
Observe the series of lower highs and lower lows in a downtrend
What is a Bearish market structure?
Illustration: Bearish market structure
A bearish market structure is characterized by a series of consecutive lower highs and lower lows. Simply put, when the price is consistently making lower lows and lower highs, it indicates the formation of a bearish market structure.
Illustration: Bearish market structure
What is the use of identifying a bearish market structure?
Identifying any market structure plays a crucial role in entry and exit. In the case of a bearish market structure, previous lows often act as resistance zones where traders can enter new short positions with the expectation of further downward movement. When the price approaches or revisits the previous low, it’s commonly regarded as a selling opportunity, often referred to as “selling the rip.“
Exhibit: Pullback in a Bearish market structure
Illustration: In a bearish trend, a pullback is a selling opportunity
What happens when there is a “Possible” change in Bearish structure?
When a stock is in a bearish trend, and the price suddenly prints a new high, traders must exercise caution because it could signal a potential trend change. However, it’s also possible that the stock may consolidate before resuming its original downward trend, or it may be a false signal known as a “bull trap.”
If the trend change is confirmed, the trader may consider exiting short positions and look for long trades instead. By being aware of these potential scenarios, traders can avoid costly mistakes.
Illustration: Formation of the first “New High” in a bearish trend
Possible scenarios after the formation of a “New High”:
Trend reversal
Consolidation followed by a continuation of the bearish trend
Bull trap
Trend Reversal
The first clear-cut scenario is a genuine trend reversal. After the formation of a new high, a new higher low is formed, eventually leading to the creation of a new uptrend. This scenario can be identified by a sustained upward movement in price, indicating a shift from a bearish to a bullish trend.
Illustration: Formation of the first “New High” and subsequent reversal
Consolidation and Continuation
In this scenario, after a “new high” is created, the price begins to consolidate below it. It’s important to note that the price never moves above the “new high” and ultimately falls, continuing the bearish trend. Traders should be cautious of this type of consolidation as it can potentially signal a trend reversal, but as long as the price remains below the “new high,” the bearish trend is likely to continue.
Bull Trap
A bull trap occurs when the price of an asset appears to be breaking above a previous resistance level, but then suddenly reverses direction and falls back lower. This “breakout” entices traders to enter long positions, believing that a breakout has occurred. However, the market reverses and ultimately moves in the opposite direction, trapping these traders.
These three scenarios are the only market structures that can form within a bearish trend, and they will continue to occur repeatedly. Therefore, it’s important to have a good grasp of these concepts as they are applicable to all timeframes.
That’s all you need to know about bearish market structure. To reinforce your understanding, try applying these concepts to a random chart and backtest them. With practice, you’ll gain more experience and become more adept at identifying these structures.
Whether you use a specific trading strategy or not, having a solid understanding of market structure will enhance your confidence in your trades and ultimately lead to more successful outcomes. So, keep practising and refining your skills, and you’ll be on your way to becoming a more successful trader.
Like this article? Don’t forget to share it!
#priceaction #trading #tradingStrategy #marketanalysis #crypto2023
In this post, I will delve into bearish market structure, providing clear illustrations and examples to help you grasp this important concept. If you aren’t familiar with market structure, you can go through this guide to brush up on your basics.
To understand a bearish market structure, it’s essential to familiarize ourselves with a bearish trend or downtrend. This will provide us with the necessary context to recognize the characteristics of a bearish market structure.
Table of Contents
What is a downtrend?
What is a Bearish market structure?
What is the use of identifying a bearish market structure?
Exhibit: Pullback in a Bearish market structure
What happens when there is a “Possible” change in Bearish structure?
Possible scenarios after the formation of a “New High”:
Trend Reversal
Consolidation and Continuation
Bull Trap
What is a downtrend?
Observe the series of lower highs and lower lows in a downtrend
What is a Bearish market structure?
Illustration: Bearish market structure
A bearish market structure is characterized by a series of consecutive lower highs and lower lows. Simply put, when the price is consistently making lower lows and lower highs, it indicates the formation of a bearish market structure.
Illustration: Bearish market structure
What is the use of identifying a bearish market structure?
Identifying any market structure plays a crucial role in entry and exit. In the case of a bearish market structure, previous lows often act as resistance zones where traders can enter new short positions with the expectation of further downward movement. When the price approaches or revisits the previous low, it’s commonly regarded as a selling opportunity, often referred to as “selling the rip.“
Exhibit: Pullback in a Bearish market structure
Illustration: In a bearish trend, a pullback is a selling opportunity
What happens when there is a “Possible” change in Bearish structure?
When a stock is in a bearish trend, and the price suddenly prints a new high, traders must exercise caution because it could signal a potential trend change. However, it’s also possible that the stock may consolidate before resuming its original downward trend, or it may be a false signal known as a “bull trap.”
If the trend change is confirmed, the trader may consider exiting short positions and look for long trades instead. By being aware of these potential scenarios, traders can avoid costly mistakes.
Illustration: Formation of the first “New High” in a bearish trend
Possible scenarios after the formation of a “New High”:
Trend reversal
Consolidation followed by a continuation of the bearish trend
Bull trap
Trend Reversal
The first clear-cut scenario is a genuine trend reversal. After the formation of a new high, a new higher low is formed, eventually leading to the creation of a new uptrend. This scenario can be identified by a sustained upward movement in price, indicating a shift from a bearish to a bullish trend.
Illustration: Formation of the first “New High” and subsequent reversal
Consolidation and Continuation
In this scenario, after a “new high” is created, the price begins to consolidate below it. It’s important to note that the price never moves above the “new high” and ultimately falls, continuing the bearish trend. Traders should be cautious of this type of consolidation as it can potentially signal a trend reversal, but as long as the price remains below the “new high,” the bearish trend is likely to continue.
Bull Trap
A bull trap occurs when the price of an asset appears to be breaking above a previous resistance level, but then suddenly reverses direction and falls back lower. This “breakout” entices traders to enter long positions, believing that a breakout has occurred. However, the market reverses and ultimately moves in the opposite direction, trapping these traders.
These three scenarios are the only market structures that can form within a bearish trend, and they will continue to occur repeatedly. Therefore, it’s important to have a good grasp of these concepts as they are applicable to all timeframes.
That’s all you need to know about bearish market structure. To reinforce your understanding, try applying these concepts to a random chart and backtest them. With practice, you’ll gain more experience and become more adept at identifying these structures.
Whether you use a specific trading strategy or not, having a solid understanding of market structure will enhance your confidence in your trades and ultimately lead to more successful outcomes. So, keep practising and refining your skills, and you’ll be on your way to becoming a more successful trader.
Like this article? Don’t forget to share it!
#priceaction #trading #tradingStrategy #marketanalysis #crypto2023
Rounding Top Pattern: Most Powerful Guide with Illustrations and Examples
Illustration: Rounding Top pattern
The rounding top, also known as a saucer top, is a bearish reversal pattern that typically emerges at the end of an uptrend. The formation of a rounding top indicates that buying pressure is gradually being replaced by selling pressure, ultimately leading to a reversal in the trend.
The pattern is characterized by a gradual upward slope followed by a rounded peak and a gradual downward slope. It is formed when the price fails to break through the resistance level at the rounded peak and instead begins to decline, as buyers’ enthusiasm wanes and sellers begin to take control. This shift is often accompanied by a decrease in trading volume, which is a further indication of weakening demand and a potential reversal.
The aim of this post is to provide insights into the following topics:
⚡Basics and identification of the pattern
⚡Components
⚡Important aspects
Table of Contents
What is a Rounding Top?
Components of a rounding top pattern:
Important aspects:
1. Prior Trend
2. Advance
3. High
4. Decline
5. Breakdown
6. Volume
7. Target
8. Stop-loss
Exhibits
Rounding top pattern with a failed breakout
Rounding top pattern with a steep base
Rounding top pattern with a shallow base
What is a Rounding Top?
A rounding top is a bearish reversal pattern that resembles the shape of an inverted “U” and signals a potential shift in market sentiment.
Rounding top patterns typically emerge at the end of prolonged uptrends, signifying a possible trend reversal.
The pattern is also known as a saucer top, owing to its similarity to an inverted saucer.
Ideally, volume and price movements should be in sync, but in reality, these correlations can vary significantly.
As the price descends from the neckline, it indicates underlying weakness and suggests that the asset may be entering a new downtrend.
Components of a rounding top pattern:
The formation of a rounding top pattern can be divided into 3 important phases, which are:
Advance
Formation of base
Decline
Different phases in a rounding top pattern
Important aspects:
1. Prior Trend
The pattern must be preceded by a significant upward movement, indicating a bullish sentiment in the market.
2. Advance
The price advance leading to the formation of the pattern’s base/peak can manifest in various ways. In some instances, the upward movement may be characterized by numerous whipsaws or fluctuations, while in other cases, the price may simply experience a period of relatively low volatility before reaching the high. In any case, the price should form a rounded shape as the trend transitions from bullish to bearish.
The “advance” phase leads to the formation of multiple reactionary highs before finally breaking down. (Chart courtesy: TradingView)
3. High
While the rounding top pattern generally resembles an inverted “U” shape, it can also take the form of an inverted “V” or “M”. Nevertheless, the peak should not be too sharp. Additionally, there is always a possibility of a new high due to an upthrust or buying climax.
The shallow base of a rounding top pattern resembling a shallow inverted “U”. (Chart courtesy: TradingView)
4. Decline
Typically, the development of the rounding top’s right half mirrors the timeframe of its left half, resulting in a balanced pattern. This implies that the duration of the price decline should be roughly equal to that of the preceding upswing. In layman’s terms, the formation of the right half of the pattern should take about the same amount of time as the left half.
Furthermore, the downward price movement should not be overly abrupt, as a steep decline could indicate a potential bear trap.
Exhibit: The right half of the pattern taking nearly the same amount of time as the left half. (Chart courtesy: TradingView)
5. Breakdown
A breakdown below the reaction lows and the neckline is a bearish confirmation of the rounding top pattern. Once the price breaks below the neckline or support level, accompanied by increased trading volume, the rounding top pattern is considered complete, and a bearish trend is expected to follow. The price may return to the neckline to test the supply before continuing downwards.
Rounding Top pattern: Breakdown and subsequent down move (Chart courtesy: TradingView)
6. Volume
Ideally, the trading volume should decrease as the pattern forms and increase when the price breaks below the support level, confirming the bearish reversal. It is important to note that these guidelines are not absolute and should not be interpreted too rigidly.
Volume levels will track the shape of an inverted rounding top: – High during the up move – Low during the formation of the base – Rising during the down move
7. Target
Employing the measurement objective technique, the price target is determined to be equivalent to the depth of the pattern’s base. This can be calculated by measuring the vertical distance between the lowest point of the base and the neckline, which serves as a crucial reference level for the rounding top pattern.
The target comes out to be equal to the depth of the base. (Chart courtesy: TradngView)
8. Stop-loss
Ideally, a stop-loss order should be positioned at the highest point of the pattern’s base. However, if the price has oscillated multiple times near the neckline, creating a series of swing highs and lows, then the stop-loss can also be placed above the most recent swing high.
Exhibits
Rounding top pattern with a failed breakout
Failed breakout (Chart courtesy: TradingView)
Rounding top pattern with a steep base
Rounding top pattern with a shallow base
Like this article? Don’t forget to share it!
#technicalanalysis #priceanalysis #priceaction #trading #crypto2023
The rounding top, also known as a saucer top, is a bearish reversal pattern that typically emerges at the end of an uptrend. The formation of a rounding top indicates that buying pressure is gradually being replaced by selling pressure, ultimately leading to a reversal in the trend.
The pattern is characterized by a gradual upward slope followed by a rounded peak and a gradual downward slope. It is formed when the price fails to break through the resistance level at the rounded peak and instead begins to decline, as buyers’ enthusiasm wanes and sellers begin to take control. This shift is often accompanied by a decrease in trading volume, which is a further indication of weakening demand and a potential reversal.
The aim of this post is to provide insights into the following topics:
⚡Basics and identification of the pattern
⚡Components
⚡Important aspects
Table of Contents
What is a Rounding Top?
Components of a rounding top pattern:
Important aspects:
1. Prior Trend
2. Advance
3. High
4. Decline
5. Breakdown
6. Volume
7. Target
8. Stop-loss
Exhibits
Rounding top pattern with a failed breakout
Rounding top pattern with a steep base
Rounding top pattern with a shallow base
What is a Rounding Top?
A rounding top is a bearish reversal pattern that resembles the shape of an inverted “U” and signals a potential shift in market sentiment.
Rounding top patterns typically emerge at the end of prolonged uptrends, signifying a possible trend reversal.
The pattern is also known as a saucer top, owing to its similarity to an inverted saucer.
Ideally, volume and price movements should be in sync, but in reality, these correlations can vary significantly.
As the price descends from the neckline, it indicates underlying weakness and suggests that the asset may be entering a new downtrend.
Components of a rounding top pattern:
The formation of a rounding top pattern can be divided into 3 important phases, which are:
Advance
Formation of base
Decline
Different phases in a rounding top pattern
Important aspects:
1. Prior Trend
The pattern must be preceded by a significant upward movement, indicating a bullish sentiment in the market.
2. Advance
The price advance leading to the formation of the pattern’s base/peak can manifest in various ways. In some instances, the upward movement may be characterized by numerous whipsaws or fluctuations, while in other cases, the price may simply experience a period of relatively low volatility before reaching the high. In any case, the price should form a rounded shape as the trend transitions from bullish to bearish.
The “advance” phase leads to the formation of multiple reactionary highs before finally breaking down. (Chart courtesy: TradingView)
3. High
While the rounding top pattern generally resembles an inverted “U” shape, it can also take the form of an inverted “V” or “M”. Nevertheless, the peak should not be too sharp. Additionally, there is always a possibility of a new high due to an upthrust or buying climax.
The shallow base of a rounding top pattern resembling a shallow inverted “U”. (Chart courtesy: TradingView)
4. Decline
Typically, the development of the rounding top’s right half mirrors the timeframe of its left half, resulting in a balanced pattern. This implies that the duration of the price decline should be roughly equal to that of the preceding upswing. In layman’s terms, the formation of the right half of the pattern should take about the same amount of time as the left half.
Furthermore, the downward price movement should not be overly abrupt, as a steep decline could indicate a potential bear trap.
Exhibit: The right half of the pattern taking nearly the same amount of time as the left half. (Chart courtesy: TradingView)
5. Breakdown
A breakdown below the reaction lows and the neckline is a bearish confirmation of the rounding top pattern. Once the price breaks below the neckline or support level, accompanied by increased trading volume, the rounding top pattern is considered complete, and a bearish trend is expected to follow. The price may return to the neckline to test the supply before continuing downwards.
Rounding Top pattern: Breakdown and subsequent down move (Chart courtesy: TradingView)
6. Volume
Ideally, the trading volume should decrease as the pattern forms and increase when the price breaks below the support level, confirming the bearish reversal. It is important to note that these guidelines are not absolute and should not be interpreted too rigidly.
Volume levels will track the shape of an inverted rounding top: – High during the up move – Low during the formation of the base – Rising during the down move
7. Target
Employing the measurement objective technique, the price target is determined to be equivalent to the depth of the pattern’s base. This can be calculated by measuring the vertical distance between the lowest point of the base and the neckline, which serves as a crucial reference level for the rounding top pattern.
The target comes out to be equal to the depth of the base. (Chart courtesy: TradngView)
8. Stop-loss
Ideally, a stop-loss order should be positioned at the highest point of the pattern’s base. However, if the price has oscillated multiple times near the neckline, creating a series of swing highs and lows, then the stop-loss can also be placed above the most recent swing high.
Exhibits
Rounding top pattern with a failed breakout
Failed breakout (Chart courtesy: TradingView)
Rounding top pattern with a steep base
Rounding top pattern with a shallow base
Like this article? Don’t forget to share it!
#technicalanalysis #priceanalysis #priceaction #trading #crypto2023
🚀$BTC Bullish Bias.
Confluence:
✅Price Action 12hrs tf Bullish Engulfing.
✅Fibonacci 0.618
🕵️♂️Stop loss is below 12hrs tf bullish engulfing.
✍️Trade at your own risk.
✍️Manage your risk.
#crypto2023 #BTC #BinanceTournament #ETH #priceaction
Confluence:
✅Price Action 12hrs tf Bullish Engulfing.
✅Fibonacci 0.618
🕵️♂️Stop loss is below 12hrs tf bullish engulfing.
✍️Trade at your own risk.
✍️Manage your risk.
#crypto2023 #BTC #BinanceTournament #ETH #priceaction
100% Guaranteed, Profitable Guide ( Learn where to buy and sell )
📢 Do you know when is the right time to buy ? As a beginner, almost 90% of traders make mistakes in buying random price levels blindly. 🤔 When, where and why should you buy and sell, there are some important key levels in the chart which you have to identify and act accordingly. 🫡 Have you heard the popular investor saying: “the trend is your friend?” Well it’s true, actually the trend is your best friend.⚠️ Let's dive into it👉I hope everyone is familiar with the trading view. (It is a charting tool we use to mark up on charts) Use it for price action and technical analysis.1/ What is Trend Analysis?Trend analysis is a way to identify the direction of the market, and it is a study of price action to analyse the trend change or reversal. By spotting trend reversal early, we can ride the wave and make well decisions.2/ Identifying Uptrends & DowntrendsIn an uptrend is made up of rising levels and peaks with formation of higher highs and higher lows. Whereas, a downtrend is made up of decline in price level with formation of lower highs and lower lows.3/ Sideways (Consolidation) TrendA sideways trend (consolidation) is when prices move sideways in a horizontal range. In this trend we play range trading level to level. (I'll drop a proper guide on this in the upcoming articles) 4/ Using Trend LinesBasic and most used tools are trend lines, Everyone uses trend lines for precise analysis of market and price. For marking charts with support, resistance and any other patterns.5/ Chart Patterns Chart patterns are the art of reading the language of price movements on a chart.To make trading decisions, traders combine these insights with other forms of technical analysis, such as technical indicators or candlestick patterns.1. Price Channels Pattern2. Ascending Triangle & Descending Triangle 3. Head & Shoulders 4. Triple & Double Top & Bottom 5. Rising Wedge & Falling Wedge Learn this, and let me know in comments if you want more examples 🫡⚠️ Note : Patterns doesn't work 100% of the time, we need higher time frame confluence with this, also we have to know our daily bias ⚠️ 🎯 Will learn new things in upcoming articles, till then Keep Following me 😎#priceaction #AmanXBT
